Government Operations Committee on Oct. 21st, 2016

[The Chair, Conservative, Tom Lukiwski]

Thank you.

Go ahead, Mr. Blaikie, please, for seven minutes.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you.

I want to pick up a bit on Mr. Clarke's thesis that there really are two competing visions for Canada Post, and that's part of what this is about. On the one hand, you have a vision that says we're headed for deficit. I think we've heard that those numbers are highly questionable and unfortunately seem to be perpetuating themselves. That's one view, and that view limits itself to asking, “What do we have to lose from Canada Post in order to make it financially viable in the way that it already operates?”

The other vision is that Canada Post and the infrastructure it has is an opportunity to provide good service to Canadians. It's a valuable public asset, so how do we enhance it as an institution whose main purpose is to provide good and needed services to Canadians where they live? What are some of the mechanisms by which we can expand that mandate and also provide the revenue going forward, not just for the new services, but also so that if some of the older valuable services need to be subsidized by other activities of the corporation, there are ways to raise the revenue within the mandate of the organization?

I think it's clear what side of that issue CUPW is on. I wonder if you want to take some time to explain that vision a little better.

[Glenn Bennett]

I'll start, and then Gord can probably add to it.

Yes, Canada Post has a big commitment here, and that's to deliver the mail right across this country, from coast to coast to coast, as I mentioned. Logistically, we now have that set up, and I don't believe that we're taking advantage of it. We have the opportunity to add postal banking into our operations. Where we see banks pulling out of small communities and northern communities, we have an opportunity, because there's a post office in the community, to move in and set up some sort of banking, whether it's just a small set-up or whatever Canada Post can arrange in an agreement to move into that operation.

There are also a lot of services that have been cut by Canada Post, such as the food to the north program and things like that. We should be using our existing operation to put those services back in and to even expand them.

Gord, I don't know if you....

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Just by way of example, here in Manitoba, our hydro utility is publicly owned. Some number of years ago, for instance, what that provided for was that the government was able to offer to Manitobans the service that they could break up their pharmacare deductible over 12 months and pay it on their hydro bill. Initially, they had to pay it in full at the end of the year.

When you have strong crown corporations, you are able to offer services to your citizens in a way that you just wouldn't have that mechanism set up for otherwise. I think that's part of the vision that you guys are presenting for Canada Post.

[Gord Fisher]

Yes, for sure. I mean, you have the disadvantage of having the expense of delivering to remote areas, but you can take advantage of that and offer services in those remote areas. Be prepared to do tailor-made services. If you're dealing with a place such as Inuvik or Tuktoyaktuk, where other services aren't offered, you can tailor a post office to offer those services and make a profit from those services. That's going to offset the additional costs you incur as a result of having to deliver there. I think that point is exactly true, just like the example you gave. Canada Post can do that.

It's an interesting situation, because the union sits there and has been saying since primarily 2008—maybe somewhat before that, but really since 2008, which, incidentally, was the year of the last mandate review of Canada Post, as you're aware—that Canada Post can and will make profits. They have made profits, and they do, but Canada Post has always been saying that the sky is falling in, that they're losing money, and they've tried to basically take away services and to take benefits away from the workers. We say that's just the wrong direction for this company to go in.

What we should be doing is talking about every possible service, competing where necessary and offering services where they're not offered. In doing so, they can make tons of profits. It's almost impossible not to if you manage it properly and you operate it properly. In fact, they have, because we know that over the last 20 years there have been $2 billion in profits that have been turned over in dividends and taxes to the federal government. Personally, I think that should have gone more into expanding services for Canadians who paid for it, but the reality is, that's the amount money left at the end of the day once all the operating costs are paid.

Thank you.

[The Chair, Conservative, Tom Lukiwski]

You have two minutes, Mr. Blaikie.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

It seems to me that when people are talking about politics, we often hear that there are revenue challenges for governments. We certainly hear it in the House. As you know, there are revenue challenges for governments, so it seems to me that if you have a crown corporation that can offer services at fair prices and generate revenue with them, that revenue either gets reinvested in services through the corporation or, God willing, there's a big enough surplus such that some of it can be transferred and used for other things.

At the end of the day, if there's a core of services that need to be offered through government, Canadians have to pay for that in some way. If some Canadians are paying for that through a fair and reasonable price for services they value, and there's a surplus and that gets applied through government to other things that we also need, is that not...? We hear about the need to lower taxes and everything else, but we also need to find revenue to provide government services. If you have effective crown corporations that are able to deliver services at fair prices and generate a profit, is that not desirable from the point of view of raising revenue for the government for other things?

[The Chair, Conservative, Tom Lukiwski]

You have about a minute.

[Gord Fisher]

Certainly it is very suitable when the profit margins hit the point where you can basically take the profit and use it to provide other services.

My concern is that even when they make hundreds of millions of dollars of profit, they haven't done that. They have still increased prices to the customers, to the businesses that use it. We would like to see, sometimes, the service improved without price increases to the customers. I think that by and large, that will result in more mail in the system, more utilization of the service, and certainly more profits, if you're providing better service.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Mr. Whalen, you have seven minutes.

[Nick Whalen, Liberal, St. John's East, NL]

Thank you very much, Mr. Chair.

Thank you all for coming. This has been a long series of meetings that we've had across the country. I just want to take the opportunity to discuss a little with the CUPW representatives about some of the things I've heard. I have a couple of questions. It's a bit of a surreal conversation, because I've had this conversation over many meetings over the course of three weeks. I'm always part of it, but it's always a different person on the other side.

I just want to let you know that we have heard a lot of what you've said. We are very concerned about protecting middle-class jobs. We have concerns that with the amount of money that workers earn in the postal system now, it's difficult for them to afford a middle-class lifestyle on those salaries. The benefits are still good, but they're not as good as they were. We recognize that it's posing a very difficult situation for postal workers and their families.

We've talked about a few things, and I've learned a lot. On the Universal Postal Union, my understanding is that the China situation will soon be resolved and that they will be affected by new rates in 2018, largely pushed by the Americans. I'm not sure how that affects international rates from other countries. Certainly the Dominican Republic, for instance, is not going to be considered a developed country.

My first question is for Mr. Bennett.

Would Canada Post and the union be okay with having the Government of Canada consider these lower rates for international mail received from developing countries being officially recognized as official development assistance, and then maybe the Government of Canada could pay some type of subsidy to Canada Post in recognition of the fact that the Government of Canada is really sponsoring and supporting the mail service of a developing country?

[Glenn Bennett]

For the product that's coming in from the third world countries, Asia is what we are particularly concerned about. We know that product is coming over by the boatload, and it's being stockpiled in China until they can load it on. It's being entered into our system.

In fact, in Vancouver it's sitting there in trucks, waiting to be worked, and then it's—

[Nick Whalen, Liberal, St. John's East, NL]

But from a subsidy perspective, to the extent that developing countries aren't paying market rates, which you don't think are fair for the services being provided, how should the Government of Canada recognize that? Is that worthy of a subsidy to Canada Post?

[Glenn Bennett]

I mentioned in my report that it's sitting there and it's costing Canada Post money. We need to do something. If you say that there's assistance coming in 2018 through the international postal fund, that's probably good news for Canada Post. Literally, it's losing money on this product.

Any assistance through that would be great. Then if there's a subsidy required, then yes, Canada Post needs a subsidy from the Canadian government.

[Nick Whalen, Liberal, St. John's East, NL]

We had a chance to visit the Vancouver sorting facility. It's very impressive. The workers are all working very hard at that location, processing millions of parcels and pieces of mail. It's very impressive.

Differentiating the levels of service that people receive provides an opportunity for Canada Post to leverage those differential services to charge more money. Could we have a relaxing in the overall universal service standard, say to three days, and then allow Canada Post to leverage its business, to charge more for same-day delivery, so that it can compete with other providers of same-day delivery services and provide more of a differential service? Would the union be okay with something like that?

[Glenn Bennett]

I believe that exists already.

[Nick Whalen, Liberal, St. John's East, NL]

I mean going further, to further reduce the level of service that regular mail receives to further enhance the value that could be gleaned from people who want same-day delivery or 24-hour delivery.

[Glenn Bennett]

Do you mean—go ahead.

[Gord Fisher]

I think in terms of relaxing the current service standard, as you gave an example of, for first class Lettermail, people already pay a significant rate and there are vast volumes. When you went through the Vancouver plant, I think they've got about 14 MLOCRs, which probably cost half a million dollars or more, or probably a couple of million dollars per machine. That is just for handling Lettermail. It's still the number one product. They still have more pieces of Lettermail than they have of any other product.

To relax those standards would cause an accelerated erosion. They still make money off Lettermail, so to basically say that we're going to have—

[Nick Whalen, Liberal, St. John's East, NL]

“No” is a fine answer. I'm just trying to probe into ways that we can try to drive revenue and what the union thinks about it.

In terms of union involvement in management of the organization, would the union be open to having seats on the board of directors of Canada Post to be more collaborative in leading the direction of how we manage this change?

[Gord Fisher]

Now, that's a tough question. I've got to say that, because I've been a postal worker since 1981. When Canada Post became a crown corporation, there were two unions at that time, and each union was offered, at a different point, a position on the board of directors. This happened originally.

One union, CUPW, said absolutely no, while the LCUC said okay, and their president actually sat on the board of directors of Canada Post.

Now those two unions are together.

It's not a decision we've made as a union, and I, as a union officer—and I think Glenn as well—couldn't speak to that until we have a debate about it. I know that goes to the governorship of Canada Post, which is an issue this committee has. I have to tell you that we have not made that decision. We're a democratic organization. It takes a while to make decisions such as that.

[Nick Whalen, Liberal, St. John's East, NL]

Another question is in the same vein. We've heard from pension experts who have spoken to us about the desire to have the pension treated on a going concern basis rather than on an insolvency basis. One of the experts we heard from suggested that this would be an appropriate accounting standard if the plan were jointly managed.

Have you discussed the possibility of jointly managing it, pulling the pension plan out of the corporation and having it stand alone, jointly managed? It could be removed from the labour negotiations, and you could say, “Here is the pension. It's a totally separate thing, jointly managed, going concern”. Would you guys be up for it? Would you promote that to your members?

[Gord Fisher]

We've not taken the position that responsibility for the pension plan should be taken away from Canada Post or that if there is a deficit in the pension plan, they should be responsible for it.

What we have said is that in some of the changes to the pension plan that we've put forward or considered over the last seven or eight years—basically since it became an issue in 2008—we should be more involved.

Presently we sit on the advisory committee. The different unions within Canada Post should not just be advisers; they should actually be on the pension plan board and make decisions about the pension plan, because they represent workers whose money is being dealt with there.

[Nick Whalen, Liberal, St. John's East, NL]

This is why I—

[The Chair, Conservative, Tom Lukiwski]

Thank you.

We're going into our final two interventions now. They will be five minutes each.

Go ahead, Mr. Maguire.